Canada is not out of the woods after several years of depressed economic activity, Prime Minister Stephen Harper warned in a year-end interview with CTV.

"We have some major challenges in front of us," Harper said in a wide-ranging interview with CTV News Chief Anchor and Senior Editor Lisa LaFlamme, which airs Monday at 7 p.m.

With an eye on 2012, Harper repeatedly mentioned how tough economic times globally could affect Canada and the budget.

"There's going to be a whole range of areas where this government's going to be taking issues over the next year to secure the sustainability of our key programs," Harper said.

"The next year will be a very challenging year for the global economy and therefore the economy of this country."

Despite extensive international and domestic criticism over Canada's decision to pull out of the Kyoto Accord, Harper remains adamant that it was the right move.

"It doesn't matter what Canada does. It doesn't matter what, frankly, Europe does. Unless we get all of the major emitters to be part of an accord that has mandatory targets, we're not going to get anywhere," he said.

"We have to have those who produce the most emissions actually doing the biggest reductions," he said, mentioning China, the United States and India are not covered under the emission-lowering accord.

At the same time, Harper also made strong statements about selling Canadian oil to China after the Keystone XL pipeline project to the United States was delayed by the White House.

"I am very serious about selling our oil off this continent, selling our energy products off to Asia," he said.

However, speaking about a recent trip to the United States, Harper did say that he's been told privately the Keystone project will go ahead.

"I ran into several senior Americans, who all said, ‘Don't worry, we'll get Keystone done. You can sell all of your oil to us.' I said, ‘Yeah we'd love to but the problem is now we're on a different track.'"

The prime minister was also joined by his wife, Laureen, for part of the interview, who spoke of the challenges of raising kids at 24 Sussex Avenue in the Facebook age.

A lot has changed for Harper over the past year, who says for the first time in a decade he has some job security and is not "living out of a suitcase."

The Conservatives' majority victory in May ended half a decade of minority politics and changed the political landscape. With the NDP and the Liberals both under interim leaders, Harper faces an opposition in flux.

He says he intends to fully use the opportunity with his firm grasp on power

"I've seen too many majority governments (in which the) bureaucracy talks them into going to sleep for three years and then they all of a sudden realize they're close to an election," he said. "We're going to try and keep busy through the whole four years."

Harper maintains that the economy continues to be the top item on his agenda, particularly as the economic recovery remains precarious because of the uncertain situation in Europe.

"We still need to find some ways that this country can continue to grow, even if our major partners and allies are not," he said.

Harper says Canada has "fiscal flexibility" but is pursuing modest reductions in government spending in order to reduce the deficit.

He adds that immigration reform, particularly with credentials recognition, could be a real boost to the Canadian economy.

"But we've got to do more in the economy of the future than just passively accept applications. We have to recruit people to come to this country, particularly when there are specific skill shortages that are developing, and that's what we're going to do as a government," he said.

A week before Christmas, Ottawa announced a new 10-year health-care plan that took the provinces by surprise. While it was received well in the Western provinces, eastward it was greeted with outrage.

"But I think we all understand that the rate of growth of the health-care system can't be sustained and that somehow that's going to have to be tackled, so that we, we keep a system that Canadians value," Harper said of the new plan. "This government will ensure that there continue to be increases in health-care transfers."

On a more personal note from the past year, Harper spoke about the passing of Jack Layton and his decision to grant the NDP leader a state funeral.

"I think in the end, the funeral and the outpouring, everybody made it as good as a situation as it could be under the circumstances. I mean truth is, obviously it was a terrible personal tragedy but I think we all made the best (of it,)" he said.

"Everybody knew Jack, knew that he was liked. He was liked by those who disagreed with, even those who disagreed with everything he believed in."

Foreign Affairs

The Arab Spring, particularly the uprising in Libya, threw the Harper government -- like most Western governments – a curveball in the international arena.

Canadian troops left for Libya in March to participate in the NATO-led mission there, with Canadian Forces aircraft taking on an active bombing role.

"In the case of Libya, the, part of the reason we got so aggressively involved as it was actually hard to imagine that even Libya could possibly get worse," Harper said of the mission, which officially ended in November.

"This has been a pretty remarkable revolution in Libya to this point."

But Harper says he is conflicted about whether the Arab Spring revolutions will led to peace in the region.

He says the situation in Egypt -- which has had peaceful relations with Israel for decades – is mixed and he's expressed his concern to Israeli Prime Minister Benjamin Netanyahu.

With Canadian combat operations ending this year in Afghanistan, Harper said the initial goal of the mission -- to stop terrorism -- has been largely successful.

"Afghanistan now, with all its internal security problems, is today no longer a threat to the rest of the world, and that is a big step forward," Harper said. "And there's been other steps forward in terms of women's rights and some of the particular services . . . but there is an awfully long way to go in terms of seeing the kind of country I think everybody would like to see."

The full year-end interview with Prime Minister Stephen Harper airs tonight. You can watch it on CTV at 7 p.m. local time in most of the country, except in Manitoba and Saskatchewan where it will air at 10 p.m. (Check your local listings.)